In Laws helping us to get home who's name goes on deed?

Question

My in laws have proposed to help my husband & I purchase a home by them paying for it out right & having us pay them back instead of a bank. Mainly so we can save on home owners insurancce etc... They want to buy the house & put it in there name with my husband as a co-owner incase something where to happen to them. It sounds like a great idea but I'm not comfortable with my name not being on the deed as they are not giving us the home but rather buying it & having us pay them back so I feel it's a loan. The house also needs ALOT of work & we'd be paying to fix it up. This is a big investment & I feel that I am not protected in all of this should something happen. the inlaws tell me it's a marital asset but it seems to me that it would be an inheritance & if something where to ever happen I would have no rights. It's already caused friction in our relationship when I bring it up. Need advice!!!! Has anyone done anything like this before? We live in FL.

Answer 1

Such an arrangement should be handled similarly to a conventional purchase with a mortgage. In other words, the property deed goes in you and your husband's name, and Mom and Dad hold the mortgage. (Yes, they can be a mortgage holder, just like a bank).

Unless it is handled in such a fashion, you would not be entitled to any interest paid deduction and property tax deduction when you file your income tax returns.

For some odd reason, I suspect that your in-laws want to protect their son and NOT you.

Answer 2

If the parents are paying 'cash' for the house, then you are correct in that you don't 'need' homeowners insurance. If there is any bank loan (by you or the parents) insurance would be required. It's not a bad idea, in any case, to have at least minimum insurance.

As the husband is a co-owner, in the event of a divorce, you would be entitled to half of his share (not half of the house).

Can you suggest...
1) That the loan be documented in writing. Include the payment schedule, and a way to document the payments. Even (especially!) cash payments, or any time you adjust payments, need to be documented. (If they let you skip a payment as a Christmas gift, or reduce a payment because you paid for a new furnace). This protects the ESTATE, so that if/when a parent dies, an accurate accounting can be presented. The more payments you can document, the better.

2) How will repairs will be paid for, and completed? Whether that counts towards the loan amount?

3) After a period of years (like 5?) ask that the home be re-titled into your names (you and your spouse), while you continue to make loan payments.

4) What happens if either/both parents die, or get divorced?

5) What would happen if you and your spouse divorce (would he pay you back for your investment?) This could be a simple agreement (in writing) between you and your spouse, or include the parents.

"Sally Smith is contributing $500 each month toward the total payment of $1000 per month, beginning January 1, 2008 toward the purchase of the house and property at 123 Main Street. In the event of a divorce, the remaining owners of the property, Mike Smith, Joe Smith, and Mable Smith, shall reimburse Sally Smith 50% of her investment to date. Reimbursement shall be made within 90 days of such an event."

You can make any agreement legal by putting it in writing. This gives you some protection, and by asking for 50% back, you make it reasonable. They don't have to pay you out every cent, because you did get the benefit of a place to live, but enough that you could move on to another home with some funds.

Answer 3

You have every right to be concerned.

My MAIN concern about your post is that you state one of the reasons for not going through a bank is "so you can save money on homeowner's insurance". I really and truly hope you will not make a foolish mistake as to not have homeowners insurance on your home...or go with a company so cheap that they don't cover anything.

Fires, break-ins...do you think people actually EXPECT any of these events to occur? I think you need to speak with a licensed agent of a major carrier to explain to you all the risks involved. Again, only foolish people refuse to take out HOI.

Now, with regards to your in-laws...if they are paying cash, then they can record themselves, with the help of an attorney, a note and a Deed of Trust...just like a mortgage company...they DO NOT have to go on as an owner.

I would wager (and I know you don't want to hear this), that your in-laws and even you husband, don't want you on the title in the event you should divorce...b/c a court cannot force the sale of something that belongs to his parents. It also protects them from any debts you may run up from being place against the property if you don't own it.

You are very correct, that it can be treated as an inheritance..which in most states are exempt from marital assets.

You may need to consult with a divorce attorney (not that you are getting a divorce..but that type of attorney would be familiar with what you would be entitled to) to see if what they are telling you is the truth or hogwash.

However, I am leaning toward the fact they are being dishonest with you.

PS: Acermill is right on with his advice. I agree completely.

Answer 4

There's a good point in the first answer you received: what about tax deductions? Are they giving you an interest free loan? If not, then you should be able to write off interest and they should show it as income (are they willing to do it?)
In the scenario you described they are buying this house for themselves and their son. When they pass away, your husband is the sole owner. When you divorce him (this is what you are worried about, right?) you are entitled to your half, BUT, if you divorce him BEFORE the parents pass away, you are entitled to one forth of the house. Of course, if your name was on the title, all this would be much easier, but the result is the same.
Buy the way, what is this about a homeowners insurance? Yes, if the mortgage is from a bank, you must have homeowners insurance, and if it's a private mortgage, you are not obligated to have homeowners insurance, but wouldn't you have it anyway? Would you risk to have a house with no fire insurance? And insurance is several hundred dollars a year, what savings are they talking about?

Answer 5

This sounds very suspicious.

You should not do this to save on insurance.

You should have a standard homeowners policy at the very least whether or not it is required.

I would be very concerned that your inlaws do not want you on the deed.

Also, you will be investing a great deal of money in the property to fix it up.

Even though it is a marital asset it will cause you a great deal of trouble if you are not on the deed and your jusband dies or you divorce.

With in laws who do not want you on the deed that sounds like a divorce just waiting to happen.

You could invest a great deal of your time and your money in this property and be left with little or nothing in a divorce.

I recommend that you hire your own attorney and talk to him immediately.

Answer 6

This sounds like a bad idea. But if its causing friction in your marriage, then let them buy the house out right. THEN, hire an attorney, and buy it from your in-laws and have them hold a private mortgage. This way, your name is on title and deed of the home. The only way then they could take the house from you is if you don't make your monthly payments, and they force foreclosure on you.

You can use this site to help you figure out an amortization schedule. http://www.eloan.com/s/amortcalc?context=purch&sid=2twZWMrIoHLzgZSwGoCBQm7sjK4&user=&mcode=

Answer 7

Pretty sure that you will find every financial clarification at= loandirectory.info-

RE In Laws helping us to get home who's name goes on deed?

My in laws have proposed to help my husband & I purchase a home by them paying for it out right & having us pay them back instead of a bank. Mainly so we can save on home owners insurancce etc... They want to buy the house & put it in there name with my husband as a co-owner incase something where to happen to them. It sounds like a great idea but I'm not comfortable with my name not being on the deed as they are not giving us the home but rather buying it & having us pay them back so I feel it's a loan. The house also needs ALOT of work & we'd be paying to fix it up. This is a big investment & I feel that I am not protected in all of this should something happen. the inlaws tell me it's a marital asset but it seems to me that it would be an inheritance & if something where to ever happen I would have no rights. It's already caused friction in our relationship when I bring it up. Need advice!!!! Has anyone done anything like this before? We live in FL.